Foundation Files Brief in Supreme Court in Challenge to Rent Control Law

The Foundation partnered with the Center for Constitutional Jurisprudence to file an amicus brief in support of petitioner in Harmon v. Kimmel, a case challenging the New York City Rent Stabilization Law as a taking of property in violation of the Fifth Amendment to the U. S. Constitution. The lower federal courts had dismissed the lawsuit, finding that the rent stabilization law was merely a regulation of rent, not a physical taking of the Harmons property. The Harmons, husband and wife, own a brownstone building on the Upper West Side of Manhattan; they live in one apartment in the brownstone, and rent six other apartments, three of which are rent-stabilized and three of which are market rate apartments. The Harmons claim that the Rent Stabilization Law is a physical taking of their property because the law forces them to continue to rent the three rent-stabilized apartments to current tenants and their successors at below-market rates in perpetuity, thus taking the Harmons fundamental property right to exclude persons from those units.

In our amicus brief, we argue that the court below incorrectly relied on Yee v. City of Escondido in dismissing the Harmons physical takings claim because the New York City Rent Stabilization Law compels an owner of rent-stabilized apartments to submit to a non-consensual permanent physical occupation of the rent-stabilized apartment units, because the decision in Yee was limited to the unusual economic relationship between mobile home park owners and mobile home owners which does not exist in the case of rent-stabilized apartments, and because the economic relationship between rent-stabilized tenants and owners of rent-stabilized buildings presents the different case contemplated in Yee.

The decision below is also in conflict with the Supreme Courts ruling in Palazzolo v. Rhode Island. The lower federal courts were confused on the issue of when transfer of property after enactment of a regulation is sufficient to cut-off rights to claim that the regulation effects a taking without compensation. In this case, the lower courts held that because the Harmons took title to the property (through inheritance) after rent stabilization was first enacted, they are bound by every re-enactment of the rent-stabilization law, which has happened continuously without interruption for more than 40 years. We argue that based on the importance of individuals right to own and use property to the overall scheme of liberty the Founders sought to protect, transfer of property should never be sufficient to authorize an uncompensated taking. That principle was recognized in Palazzolo, but ignored by the lower courts in this case. We urge that review should be granted in order to resolve the apparent confusion in the lower courts on this critical issue.